Credit Card Problems And How To Solve Them
Credit Card Problems And How To Solve Them | Guest Post From Bad Credit Low Income Loans.
Surviving a credit crisis is pretty hard. What makes it harder for a lot of people, though, is that they don’t act as soon as trouble rears its ugly head. If you’re finding yourself in a situation where you’re having trouble keeping up with your credit card bills, for whatever reason (and reasons are plenty in this economic crisis), you should know that there are places you can turn to. Among others, you can get help from government agencies and nonprofit groups.
The kind of help you’re going to be looking for is going to depend on how dire your situation is. We’ve divided what we call plastic problems in three categories, in order of increasing severity: if you’re a little late on a payment, if you’re consistently late, and if you’re drowning under credit card debt. Here are your options in each case.
Sporadic Late Payments On Credit Card Bill
If you can’t pay your credit card’s monthly minimum, or if your payment is already late, the first order of business should be picking up the phone and making a call to your credit card company. Your credit card issuer will talk to you unless you’ve been missing quite a few payments. This is a very competitive industry (after all, there are banks that offer secured credit cards to people with bad credit) and getting a new customer costs those companies upwards of $100. So they’ll do what they feel is right (within reason) to keep their current customers, especially when they know that it only takes a web search to compare credit cards and see what the competition is offering.
The main factor that’s going to determine what treatment you get is your payment history. If you’re only been late once or twice in the past twelve months, credit card issuers may waive the late fee. But before they agree to do so, they will either have to see you make the payment or they will ask for very precise details as to when said payment will be received. You might think this is trivial but taking this step will save you more than the late fee. Should you fail to take care of this, your issuer will increase your interest rate to penalty levels (up to 29%), which triggers what the industry calls “Universal Default“: the issuers of other cards you hold increase your interest rates too.
Chronic Late Payments On Credit Card Bill
Let’s say your situation is different and you’re consistently making late payments, and coughing up hefty fees in the process. The problem might be a simple cash flow issue, meaning that your credit card payment might be due at the same time as all your other bills and you don’t have enough money left to pay it, or it might be due at a time of the month where you simply have no cash, like a few days before you get paid. In these situations, you can ask your credit card company to reschedule your due date so that your payment falls at a time that makes it easier for you to pay for it.
If you’re heavily in debt and are having trouble making your minimum payments, your best bet would be to ask your credit card issuer to lower your interest rate. You might need a couple weeks of preparation for this one, but it’s really not complicated. Simply keep all the credit card offers you receive over a few weeks, and call your credit card company. Just make sure that you’re made good on your payments for the last six months. Ask to have your interest rate lowered so you can keep making your payments. Many credit card issuers would rather agree to that than lose you to a competitor.
Drowning Under Credit Card Debt
The least enviable situation is the one where you’re just staggering under a mountain of credit card debt that you just can’t keep up with. If that’s your situation, then getting professional help might be the best thing to do. Look for a certified credit counselor. He/she will examine your income versus your expenses, help you address your financial problems, and on that basis, will negotiate with credit card companies on your behalf. In many cases, you will be able to work out a satisfactory deal where your interest rate is lowered, new penalties are eliminated, and sometimes the balance that you owe is reduced.
It’s important though to keep in mind that the Federal Trade Commission (FTC) warns that not all credit counselors are reputable. You should really do some due diligence to find one that will help you out instead of leaving you worse off than when you contacted them. Another issue to contend with is the tax implications of having a portion of your debt forgiven or written off. When you settle your credit card debt and a portion of it is written off, that forgiven portion is considered by the IRS to be taxable income for you and you will have to pay taxes on it.
When it comes to dealing with debt problems, swift action is often the best thing to do. Knowing your rights and getting the correct information also helps. As I like to say, when it comes to financial matters, ignorance is not bliss.